What is restructuring and what does a restructuring professional do?
Restructuring refers to the financial or operational modification of some or all of an organisation. Restructuring can be undertaken for a number of reasons including the desire to access post-acquisition synergy, improve efficiency and financial performance or increase levels of working capital. Restructuring is also commonly associated with remedying underperformance in businesses facing financial stress.
The overall goal of restructuring is to enhance or restore value, make the company operate more effectively and deliver sustainable improvements to trading performance. This is achieved through amending the structure of the company, cutting costs, interrogating supply chains, modifying debt structures or increasing liquidity through the sale of assets.
Restructuring professionals work alongside the businesses to optimise financial and operational performance. They will review company processes, procedures and performance to identify systemic challenges that impact an organisation’s cost base, commercial results and available working capital. They will also build financial models and undertake financial analysis to create recommendations and provide advice with respect to potential restructuring solutions.
Restructuring professionals will be tasked with preparing financial turnaround and change management plans that can be delivered within tight timescales. Excellent communication skills are required to manage a large number of diverse stakeholders throughout any implementation.
Responsibilities will vary, but examples include:
- Undertaking detailed financial and commercial analysis to identify key issues.
- Reviewing key drivers of value and key risks of the organisation.
- Preparing financial models.
- Review the businesses for long term viability, valuation and assessing capital structure options.
- Assessing and understanding the priority of various classes of creditor.
- Undertaking critical analysis of trading and cash flow forecasts and managing and monitoring these.
- Reviewing the adequacy of existing funding facilities, including consideration of financing limits, terms and covenants.
- Working with multiple stakeholders (management/investors/banks) to negotiate, agree and implement solutions.
- Working with senior management to implement cost saving and working capital improvement plans.
- Preparing presentations and/or reports to key stakeholders.
- Maintaining a thorough understanding of statutory and compliance processes and deadlines.
Why are they important?
A restructuring situation will be unfamiliar for many businesses. Restructuring professionals are experienced, skilled individuals who know how to prioritise issues, manage and implement a turnaround or restructure and focus a business on the right path to build a strong platform for the future.
Skills needed for this role
Restructuring professionals need a strong commercial and business acumen, along with sound analytical skills and high attention to detail. They must have excellent project and time management skills, with the ability to work to tight deadlines in a pressurised environment. Superb interpersonal and communication skills are also essential, and individuals must be comfortable working with a diverse range of individuals at all levels.
Strategic Professional Options examinations linked to this role
Career opportunities presented by this role
Restructuring roles mainly exist in larger accountancy firms or in specialised advisory and consulting businesses. Career progression is generally well structured and there are opportunities to progress up to partnership or director level.
High level competencies required include:
Advisory and consultancy
A. Gathers and understands financial and non-financial information to develop complete knowledge of the client business and the environment in which it operates.
B. Provides expert advice that will add value to the business and gain advantage.
C. Identify and advise on business partnering to develop strategic relationships to create opportunities, improve performance and solve business problems.
D. Prepare and present business plans and advise on the actions to implement these plans.
A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.
B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.
C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.
D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.
E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.
Governance, risk and control
A. Evaluates organisational structures and governance to protect the long-term interests of stakeholders.
B. Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.
C. Identifies and manages risk appropriately.
D. Uses risk management for the best interests of an organisation and its stakeholders.
E. Monitors and applies relevant legislation, policies and procedures.
A. Applies development and performance management, in the wider business and technological environment, within the context of strategic planning and implementation.
B. Directs organisational performance through the selection and measurement of financial and non-financial performance indicators.
C. Collaborates on the key tactical and organisational areas of budgeting and control, capital investments, people and resource management.
D. Consults on the design and use of current and emerging technology and information systems to improve strategic decision-making and organisational performance.
Stakeholder relationship management
A. Positively develops relationships with internal and external stakeholders.
B. Communicates and gains commitment from internal and external stakeholder.
C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.
D. Applies professional and ethical judgement when engaging with stakeholders.
E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.
Strategy and innovation
A. Applies business acumen and commercial awareness to deliver business objectives.
B. Recommends a range of suitable strategic options from which to develop sustainable plans and objectives.
C. Evaluates, justifies and implements suitable strategic options.
D. Adopts and applies innovative methods to implement strategy and manages change.
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